Wednesday, July 07, 2010

Save Us From These Bankers, Fast

Global Geo-Politics Net is carrying an important article by David Cronin highlighting the desperate need for a civil society campaign to counter the might of financial lobbying by banks and hedge funds. Besieged by legions of well-funded financial lobbyists (reinforced by columns of financial journalists acting as mouthpieces for the City of London and other offshore financial centres), politicians are fighting an uneven battle to protect public interest from endless lobbying to water-down regulation and protect tax privileges -- and there are virtually no organised campaigns to oppose this relentless pursuit of self-interest.

A cross-party alliance of European parliamentarians has issued a call for the creation of an international civil society campaigning organisation to work on systemic financial market problems in the same way that Amnesty International has worked on human rights issues and Greenpeace on environmental issues. Citing Tax Justice Network's research into how hedge fund activity has been driven by the constant search for innovative ways to avoid taxes, the article explains how the pressure placed on politicians by financial lobbyists threatens to de-rail attempts to regulate against a repeat of the crisis:

"According to the MEPs, the pressure they have been placed under by the financial industry is so intense that it represents a threat to democracy, especially as public interest groups have generally lacked the means or the expertise to mount a robust counter- offensive to the banks’ efforts. "

A major part of the problem lies with the lack of independence of thought within the mainstream political processes. The majority of mainstream political parties, whether in government or opposition, have long since fallen to laissez faire economics. All too often their policy making apparatus - the think-tanks and advisory teams that feed through new ideas - are similarly captured by economic ideas that have failed to protect public interest. In far too many cases these "independent" bodies are funded by vested interests and staffed by secondees from banks and accounting firms: the very people who caused the crisis in the first place. And to make matters even worse, there is a plethora of "independent" academics whose academic chairs are funded by banks and such-like, and who act as hired guns for the vested interests.

An example from BBC's Today programme illustrates the extent of this capture of political processes. In a short news item about a new report on the affordability of public pensions in the UK, BBC journalists cited two "independent" think-tanks as the source of this "independent" report: who were they? The Institute of Economic Affairs and the Institute of Directors. Objective and politically detached? Both are political lobbyists representing City of London interests.

Completely unrepentant about their role in precipitating the worst financial crisis since the 1870s, and determined to preserve the de-regulated model which has successfully transferred huge volumes of wealth upwards from ordinary people to the super-rich class who operate from offshore secrecy jurisdictions, financial lobbyists are working over-time to bamboozle politicians and re-write laws to suit their purposes:

"MEPs had to wade through 1,600 suggested amendments to the law on that occasion. Although only MEPs themselves can sign amendments, it is common practice for industry lobbyists to act as "ghost-writers". More than half of the amendments in this case were written by the financial services industry, according to Parliament insiders. The hedge fund industry — financial speculators largely based in the City of London — has literally been seeking to write the rules it should play by itself. In April, the Parliament’s main committee for economic affairs voted on its response to the proposed law. MEPs had to wade through 1,600 suggested amendments to the law on that occasion. Although only MEPs themselves can sign amendments, it is common practice for industry lobbyists to act as "ghost-writers". More than half of the amendments in this case were written by the financial services industry, according to Parliament insiders."

The world stands on the edge of a precipice. The impetus for reform that followed in the wake of the financial crisis has been slowed by the relentless pressure from financial lobbyists. The burden of paying for the crisis has been almost entirely shouldered by ordinary people. Public and private debt burdens remain high, but earnings for the majority are stagnant or falling (director's pay being a major exception). The situation will undoubtedly deteriorate as the impact of European austerity packages hits the people in Europe and in other regions that trade with Europe. Unless measures are taken to re-regulate financial services, and especially the crucibles of toxic innovations that caused the crisis in the first place, we are headed for another, even more disastrous crisis in the not-too-distant future. The call from European politicians for civil society action should not go unanswered. TJN, for one, is keen to participate.

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About Me

The Tax Justice Network (TJN) is an international, non-aligned network of researchers and activists with a shared concern about the harmful impacts of tax avoidance, tax competition and tax havens.
www.taxjustice.net